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Cruise lines opened to lawsuits

(Bloomberg) ? Cruise lines that operate in US waters can be sued by passengers under a federal disabilities law, even if the ships are registered in another country, the US Supreme Court ruled.

A divided court today said the Americans with Disabilities Act requires those ships to make non-structural accommodations, potentially by eliminating higher fares for accessible cabins and ensuring that all passengers can reach evacuation equipment. At the same time, the court said ships don?t have to remove permanent physical barriers to wheelchairs and scooters.

Excluding foreign-flagged ships from the law ?would be a harsh and unexpected interpretation of a statute designed to provide broad protection for the disabled,? Justice Anthony M. Kennedy wrote for the court in Washington.

The ruling, 6-3 on the central issues, is a partial defeat for companies including Star Cruises Ltd., whose Norwegian Cruise Line was the subject of the high court fight. Virtually all of the 100 cruise ships that visit US ports are foreign-flagged. Those vessels carry some ten million passengers a year, three-quarters of them US residents.

Spokesmen for the world?s two largest cruise lines, Carnival Corp. and Royal Caribbean Cruises Ltd., didn?t have any immediate comment, and a lawyer representing Norwegian wasn?t immediately available for comment. Norwegian has said in the past it welcomes disabled passengers and doesn?t discriminate against them. The decision allows a lawsuit by Douglas Spector and Julia Hollenbeck, two disabled passengers who say Miami-based Norwegian illegally discriminated on cruises that departed from Houston.

?It?s a significant but not absolute win for people with disabilities,? said Thomas Goldstein, a Washington lawyer who argued the case for Spector and Hollenbeck. ?Almost all of our claims are vindicated.?

Kennedy said the law doesn?t apply to foreign vessels? ?internal affairs,? which he said include the ship?s basic structure.

?A permanent and significant modification to a ship?s physical structure goes to fundamental issues of ship design and construction, and it might be impossible for a ship to comply with all the requirements different jurisdictions might impose,? Kennedy said.

Goldstein said that exception would let passengers demand temporary ramps, new handles on doors and lifts into saunas.

?We recognise that the court suggested that the most significant permanent structural changes to the ship would not be required, but that leaves a great deal of room for accommodation,? Goldstein said.

The ruling nonetheless spares cruise ships what might have been a multimillion-dollar expense had the court required physical changes. ?The cruise lines are going to breathe a big sigh of relief,? said Robert LaFleur, an analyst at Susquehanna Financial Group LLP in New York with a ?positive? rating on Carnival and Royal Caribbean shares. ?The big threat here was to have to retrofit the ships to be compliant.?

The Bush administration sided with the passengers, arguing that the law allowed suits against foreign-flagged ships.

Justices John Paul Stevens, David H. Souter, Ruth Bader Ginsburg, Stephen G. Breyer and Clarence Thomas joined all or part of the majority opinion. Chief Justice William H. Rehnquist and Justices Antonin Scalia and Sandra Day O?Connor dissented. Thomas filed a partial dissent, saying he would have left it to the lower courts to decide whether Spector and Hollenbeck could demand non-structural changes.